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Strategic Corporate Social Responsibility

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Title: Strategic Corporate Social Responsibility


1
Strategic Corporate Social Responsibility
  • MBA 292T.11
  • 22 February 2009
  • Professor Kellie A. McElhaney

2
Todays class
  • Morning
  • Welcome intros
  • CSR in the News
  • Defining CSR
  • CSR Frameworks Systems
  • Afternoon
  • CSR Reporting Communications
  • CSR Cases
  • CSR Strategy Development Assignment
  • Personal SR Strategy Assignment

3
CSR in the News
4
CSR in the News
  • Surprising survivors Corporate do-gooders
  • As companies cut costs, social responsibility may
    seem like an easy target. But many big names are
    sticking with the program.
  • Tough season for Intel. Its stock price slipped
    42 in 2008 and its fourth-quarter numbers were
    poor, with net income off 90 from a year
    earlier. Days before releasing its fourth-quarter
    results, the company launched the Small Things
    Challenge, a commitment of up to 300,000 to
    education and development in countries like
    Afghanistan, Cambodia, Haiti and Uganda in
    partnership with non-profit groups Kiva.org and
    Save the Children.
  • "You can't save your way out of recession - you
    have to invest your way out," Intel chairman
    Craig Barrett told Fortune. "We look at our CSR
    activities in pretty much the same way you can't
    just do them in good times and then just forget
    about them in bad times and hope to get any
    results."

5
CSR in the News
  • Surprising survivors Corporate do-gooders
  • Starbucks' stock lost more than half its value in
    2008. CEO Howard Schultz responded quickly,
    outlining more than 400 million in cost
    reductions for 2009.
  • There was one area that escaped relatively
    unscathed corporate responsibility. While
    Starbucks will cut some undisclosed costs, it
    recently launched a (Product) RED card to benefit
    African HIV and AIDS programs and plans to become
    the world's largest purchaser of fair trade
    coffee this year, among other efforts.
  • Short-term thinking in a recession can lead to
    the "false belief that investments in people and
    training can wait that corporate social
    responsibility can be put on the back burner,"
    Schultz wrote in a November essay in the
    Huffington Post. "Now is a time to invest, truly
    and authentically, in our people, in our
    corporate responsibility and in our communities.
    The argument - and opportunity - for companies to
    do this has never been more compelling."

6
CSR in the News
  • Wal-Mart Mexico Inaugurates Largest Sun-Operated
    Photovoltaic Installation in Latin America
  • Solar panels will generate 20 of the store's
    energy requirements for a full year
  • 1,056 solar panels were installed on the roof of
    Bodega Aurrera Aguascalientes
  • 140 tons of CO2 emissions will be eliminated
  • In 2005, Wal-Mart Mexico committed to the
    following sustainability efforts
  • 100 renewable energy sources by 2025
  • Zero water discharges by 2025
  • 25 increase in eco-friendly items by 2012
  • Zero waste by 2025

7
CSR in the News
  • One Year On, Clorox's Green Works Dominates
    Market
  • Clorox's green gamble appears to be paying off A
    year after the company launched its Green Works
    line of natural cleaning products, the brand has
    established itself as a leader in the category,
    capturing 42 market share.

8
CSR in the News
  • Times Square Advertisers Turn to Wind Power
  • Thirty of the Times Square's iconic lighted
    billboards - including Coca-Cola's long-running
    red sign - have shifted to 100 wind power.

9
CSR in the News
  • Coca-Cola Enterprises Boosts Commitment to
    Sustainability with Launch of Largest Hybrid
    Electric Delivery Trucks in North America
  • Coca-Cola Enterprises (NYSE CCE) Chairman and
    Chief Executive Officer John F. Brock announced
    the deployment of the largest hybrid electric
    delivery trucks in North America
  • CCE plans to deploy 185 hybrid electric trucks
    across the United States and Canada in 2009,
    bringing their total number of hybrid electric
    delivery trucks to 327, the largest such fleet in
    North America

10
CSR in the News
  • Starbucks and Service
  • In celebration of Martin Luther King Jr. Day and
    the Inauguration, Americans are being encouraged
    to volunteer. Inspired by this effort and as
    part of the Starbucks(tm) Shared Planet(tm)
    commitment to communities, beginning January 21,
    Starbucks is teaming up with HandsOn Network for
    the "I'm In!" campaign
  • http//pledge5.starbucks.com/
  • "I'm In" invites our customers to pledge five
    hours to volunteer and connects them with
    projects in their communities. Our goal is to
    have one million hours pledged by January 25.
  • Offering a free cup of tall brewed coffee to
    anyone who fills out a pledge card to celebrate
    this call for service

11
Intros This Course
12
Professor McElhaney
  • Has been on sabbatical for a year
  • Wrote a book (see required reading)
  • Consulted
  • Got told she looked like Sarah Palin
  • Got a tattoo
  • Worked in Haiti
  • And is excited to be back in the classroom!

13
Seriously
  • Recovering banker since 1992
  • University of Michigan (Ross) 1993-2002
  • Professor at UC Berkeley since 2002
  • Founding Director, Center for Responsible
    Business
  • Ranked 1 in world by Financial Times in 2008
    Ranked 2 in country by WSJ in 2006 2007
  • Extensive Corporate consulting Gap, HP, Nokia,
    Erste Bank, eBay, Navigant, McDonalds, Blue
    Cross, Statoil, Nvidia, Kimberly Clark, Twitter
  • Research focus areas Strategies of CSR
    Branding CSR Diversity CSR
  • Book called Just Good Business out in Fall 2008

14
Who Are You?
  • Name?
  • Occupation?
  • Why did you take this course?
  • Whats your passion?

15
This Course Is
  • About business strategy
  • Real-world, current, emergent
  • Fast-paced, packed in, like drinking from a fire
    hose
  • Taught using multiple methods
  • A unique learning experience
  • Experiential, hands-on, active
  • Something that will stay with you

16
This Course Is Not
  • Typical b-school course with HBS cases
  • Traditional, straight-lecture, cut and dry,
    neatly packaged
  • For the close-minded or risk-averse
  • Good for passive non-participators in learning
  • For those who like to skip classes
  • For those attached to their lap tops, PDAs and
    cell phones

17
Defining CSR
18
Dr. Suess Did it Best (1971)
19
Unless.
20
What is CSR?
Safe products?
Solving social problems?
Workplace diversity?
Environmental impact?
Risk management?
Employee treatment?
Philanthropy?
Employee volunteerism?
Human rights?
Sustainable development?
Business ethics?
Corporate governance?
Transparent reporting?
Sponsorships?
PR?
How would you define CSR?
21
Please Be Clear
  • The C is the most important aspect
  • CSR is about making money
  • You can do well from doing good
  • You must talk about it
  • You cant lead (consumers) with it (yet)
  • No company is 100 good or 100 bad

22
CSR is
  • A business strategy that
  • Creates wealth
  • Protects wealth
  • It is about using the power of business to
    improve the world.

23
A Company Who Gets It Whirlpool
24
Whirlpool Habitat for Humanity
  • 25M commitment in 1999
  • Given 34M, plus 73,000 appliances to 36,000
    homes
  • Pledged to give through 2011
  • Launched Building Blocks initiative in 2006,
    sending over 1000 employees more volunteers to
    build an entire block
  • Was philanthropy became a brand message
  • We make very large, very heavy metal machines,
    often with big motors. This puts a human face on
    what could be a very cold metal category.
  • Sponsored Reba McEntire Habitat for Humanity Tour

25
Has Business Impact
26
Its an Integrated Strategy
27
What would it take for Wal-Mart to be that
company, at our best, all the time? What if we
used our size and resources to make this country
and this earth an even better place for all of
us customers, associates, our children, and
generations unborn? - Lee Scott, CEO, October
2005
Another Company That Gets It
28
Wal-Marts Sustainability Goals
29
2008 The Company of the Future
30
1 Employee/ 1M Dollar Impact
31
A Short Story in Three Parts
32
Short Story Part One
  • The Role of the Private Sector

33
Shift in Power
2007 2007 2007
  Company/Country Revenue (Fortune Magazine)GDP (World Bank)millions, USD
1 United States 13,201,819
2 Japan 4,340,133
3 Germany 2,906,681
4 China 2,668,071
5 United Kingdom 2,345,015
22 Exxon Mobil 339,938
23 Poland 338,733
24 Austria 322,444
25 Wal-Mart Stores 315,654
26 Norway 310,960
27 Saudi Arabia 309,778
28 Royal Dutch Shell 306,731
29 Denmark 275,237
30 BP 267,600
34
Shift in Trust
Trust in business at all-time low (lower
than post-Enron)
Edelman Trust Barometer, 2009
35
Want Government Regulations
36
Want to Act Personally
37
Need to Hear CSR Messaging
38
Short Story Part Two
  • The Challenges of our World

39
Challenges of our World
40
The Third Part is a piece of a Solution
Corporate Social Responsibility (CSR)
41
CSR Has Gone Mainstream
42
CSR is Everywhere
43
Defining CSR
  • Net Impact
  • Using the power of business to improve the world.
  • Business for Social Responsibility (BSR)
  • Companies being able to be commercially
    successful in ways that demonstrate respect for
    ethical values, people, community, and the
    environment.
  • A Corporate Strategy Definition (McElhaney,
    1998)
  • A corporate strategy that is integrated with (1)
    core business objectives (2) core competencies
    to create financial and social/environmental
    returns, and is embedded in corporate culture and
    day-to-day business operations.

44
Strategic CSR
  • CSR Strategy must fit two things
  • Core business objectives
  • Increase sales, penetrate new markets, engage
    employees, reduce operating expenses, improve
    reputation, protect brand, beat competitors
  • Core competencies
  • Technology, financial products services, making
    markets, natural food, automobiles and
    transportation systems, travel tourism.

45
Global Citizenship/ CSR/ Sustainability
  • Employee Engagement
  • Community Investment
  • Philanthropy
  • Government Public Relations
  • Governance Ethics
  • Environmental Footprint
  • Supply Chain/ Sourcing
  • Social/ Environmental Impact of Products
    Services

46
A Typical Corporate Strategy
Hewlett Packard, 2006
47
A Typical CSR Strategy
Cause marketing
Supply Chain
Community investment
Safe products
Enviro management
NGO pnerships
Human rights
Employee volunteerism
Fair employee treatment
Philanthropy
Product give-aways
Business ethics
Corporate governance
Social/ environmental reporting
Sponsorships
Workplace diversity
48
A Lost Opportunity
to utilize CSR as a powerful integrated
business strategy, not an add on.
49
What People Think CSR Is
  • Spending (a little bit of) the (whole lot of)
    money that you make.

50
What CSR Really Is
  • How you make (the whole lot of) money that you
    spend.

51
CSR is not about how you spend the money you
make. Its about how you make the money you
spend.
52
The Triple Bottom Line
Triple Bottom Line
J. Elkington, SustainAbility
Social
Economic
Environmental
53
Internal External CSR
Transparency
Governance
Supply Chain
Mission, Vision, Values
Reporting
Compensation/ Benefits
Stakeholder Engagement
Environment
Ethics
Diversity
Human Rights
Socio-political Issues
Health Wellness
Community Engagement Investment
Accountability
Downsizing Layoffs
Privacy
Work Life Balance
Philanthropy
Marketplace
Job Satisfaction
54
Defining CSR Most Important Thing a Company Can
Do to Be Seen as Socially Responsible
Source Globescan 2005
55
What does it mean to be a good Global Citizen?
Source 2006 Fleishman Hillard/National Consumers
League study, Rethinking Corporate Social
Responsibility
56
Stages of CSR
Sweet Spot
57
CSR Frameworks
58
Framework 1 The Changing Social Contract
Source The McKinsey Quarterly , 2006
59
Framework 2 Triple Bottom Line
ECONOMIC
SOCIAL
ENVIRONMENTAL
PEOPLE, PLANET, PROFIT
60
Framework 3 Modified BITC
Workplace
Community
  • Employees
  • Retirees/alumni
  • Recruits

Marketplace
  • Clients/customers
  • Regulators/legislators
  • Investors
  • Academics
  • Suppliers

Environment
  • Communities in which we live and work
  • Not-for-profit and non-governmental organizations
    that support communities
  • Physical environment
  • Not-for-profit and non-governmental organizations
    that support the environment

61
Framework 4 Legal and Moral Liability
SustainAbility, Executive Summary The Changing
Landscape of Liability, January 21, 2005
62
Framework 5 Risk-Opportunity Continuum
MAXIMIZE OPPORTUNITY
MINIMIZE RISK
  • Use core assets in a positive way, to improve
    underlying business context
  • Take a big-picture view
  • Go beyond compliance
  • Lift or stabilize reputation
  • Prevent damage to reputation
  • Forestall the negative use of core assets
  • Focus on compliance and managing legal liability

63
Framework 6 Shared Value
  • The essential test that should guide CSR is not
    whether a cause is worthy but whether it presents
    an opportunity to create shared value that is,
    a meaningful benefit for society that is also
    valuable to the business.

Social Dimensions of Competitive Context Social
issues in the external environment that
significantly affect the underlying drivers of a
companys competitiveness in the locations where
it operates
Generic Social Issues Social issues that are
not significantly affected by a companys
operations nor materially affect its long-term
competitiveness.
Value Chain Social Impacts Social issues that
are significantly affected by a companys
activities in the ordinary course of business.
Source Porter, Michael E. and Mark R. Kramer,
Strategy Society The Link Between
Competitive Advantage and Corporate Social
Responsibility, Harvard Business Review, 2006
64
Framework 6 Shared Value
Generic Social Issues
Value Chain Social Impacts
Social Dimensions of Competitive Context
Good citizenship
Mitigating harm from value chain activities
Strategic philanthropy that leverages
capabilities to improve salient areas of
competitive context
College Bound
Transform value chain activities to benefit
society while reinforcing strategy
Responsive CSR
Strategic CSR
From Porter, Michael E. and Mark R. Kramer,
Strategy Society The Link Between Competitive
Advantage and Corporate Social Responsibility,
Harvard Business Review, December 2006
65
Framework 6.5 Changing the Game
Offensive CSR can distinguish a companys
reputation but cannot protect it defensive CSR
can protect a reputation but cannot distinguish
it. Both are necessary to succeed in todays
business climate.- Kramer Kania, Changing
the Game
66
Designing a CSR Structure Nine Steps (BSR)
  1. Understand drivers (internal external)
  2. Identify key CSR issues
  3. Identify evaluate stakeholders
  4. Identify current functions supporting CSR
  5. Analyze current CSR systems, culture
  6. Design CSR structure
  7. Develop effective staffing plan
  8. Create cross-functional system
  9. Match budget to best framework

67
Stages of corporate citizenship BC CCC
68
Stages of CSR
  • Defensive
  • Its not our job to fix that
  • Company faced with pain, criticism, reacts
    defensively
  • Compliance
  • Well do just as much as we have to
  • Cost of doing business, do just as much as need
    to
  • Managerial
  • It is the business
  • Moves CSR to core business managers functions
  • Strategic
  • It gives us a competitive edge
  • Realigns strategy to use CSR as competitive
    advantage
  • Civil
  • We need to make sure everyone does it
  • Need to involve all in sector, collective action

69
A CSR Continuum
Philanthropic
Transactional
Integrative
Growth stage
Level of engagement Low High
Importance to mission Peripheral Strategic
Magnitude of resources Small Big
Scope of activities Narrow Broad
Interaction level Simple Intensive
Managerial complexity Infrequent Complex
Strategic value Modest Major
EXAMPLES ACTIONS Donation Grants Event sponsorship Cause-related marketing Employee volunteerism Joint-advocacy Joint-action Deep partnerships Financing principles
Adapted from The Collaboration Challenge, James
E. Austin
70
CSR Report Analysis
71
CSR Report Analyses
  • What are the report's strengths weaknesses?
    What are your specific recommendations for
    improvement?
  • Did the report change your opinion of this
    company?
  • Would the report change your likeliness to work
    for this company, or purchase their goods/
    services as a consumer?
  • Based on the report, what do you think are the
    key issues for this industry and how well is this
    company addressing these issues? 
  • Also consider the following issues
  •  
  • Does/ how does the company define CSR?  How
    evolved is the companys view of CSR?
  • How integrated is their CSR strategy?  Is it
    aligned with core business objectives, core
    competencies?
  • How sustainable is their CSR strategy?
  • What are the metrics for success?  How do they
    measure their CSR impact?
  • Who seems to be the targeted audience(s)?  Is
    this clear from the report?
  • What are the opportunities associated with their
    CSR strategy?  Risks?  Strengths?  Weaknesses??
  • From a pure document aspect, assess the strengths
    and weaknesses of the report?
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